Could the Department of Education Teach the IRS About Collections?

It was standing room only in D.C. at the Department of Education’s Pre-Solicitation Conference on January 22, as current contract holders, subcontractors, and next-round hopefuls crammed into the Barnard Auditorium, hoping to walk away with some insight or nugget of information that will help to land the next plum contract that is expected to be awarded in September of this year.

What makes the ED contract one of the most desirable for US collection professionals to obtain? In 2007 alone, collection agencies generated $300 million in profitable fees from the ED contract. As long as contracting agencies are performing along the standards enforced by the powers that be, the contract will not be terminated, rates will not be reduced once they’re set, and if you’re performing better than your competitors, you’re assured increased placements. Collection agencies in other market segments are simply not given the same assurances from their clients no matter how large or desirable the client might be. We all know the business risks that exist in the collection business. The client might be acquired by a competitor, rates may be reduced without notice, and decision makers governing placements might leave their post taking their relationships with them. None of these concerns exist with the ED contract.

So here’s my question: If the U.S. Department of Education is able to create a win-win situation among its agency vendors, why can’t the Internal Revenue Service get its act together? In 2007 alone, collection agencies returned $2 billion to the Department of Education which goes right back into providing future education funding. Complaints are not tolerated and privacy is protected. And after more than 30 years, the blueprint for a successful contract has already been written. That is why I continue to hold out hope that the IRS will eventually replicate the successes of its sister agency, the Department of Education and as a result, become the single largest source of new business to collection agencies in history.

What do you think?

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